A combination lock should really be called a permutation lock. Find out why.

Book WormThe Elements of Investing is a short, straight-talk book about investing and saving. While talking about power of saving and compounding, authors, Burton Malkiel and Charles Ellis, write –

Time is indeed money, but as George Bernard Shaw once said, “Youth is wasted on the young.” If only we could all train ourselves at a young age to know what we know now. When money is left to compound for long periods, the resulting accumulations can be awe inspiring.

Benjamin Franklin provides us with an actual case. When Franklin died in 1790, he left a gift of $5,000 to each of his two favourite cities, Boston and Philadelphia. He stipulated that the money was to be invested and could be paid out at two specific dates, the first 100 years and the second 200 years after the date of the gift. After 100 years, each city was allowed to withdraw $500,000 for public works projects. After 200 years, in 1991, they received the balance—which had compounded to approximately $20 million for each city. Franklin’s example teaches all of us, in a dramatic way, the power of compounding. As Franklin himself liked to describe the benefits of compounding, “Money makes money. And the money that money makes, makes money.

The story underscores the huge significance of time in the process of compounding. It doesn’t matter at what point in the market cycle you start your investing journey. What matters is that you stay invested and adhere to a disciplined schedule of regular saving and investing.

Luck in picking the right time to invest is all well and good, but time is much more important than timing. There is always a good excuse to put off planning for retirement. Don’t let it happen to you. Put time on your side. To get rich surely you have to do it wisely—which means slowly—and you will have to start now.

When it comes to compounding there is something special about the number 72. Do you know the rule of 72? It unlocks the mystery of compounding. Here’s how it works –

X × Y = 72. That is, X (the number of years it takes to double your money) times Y (the percentage rate of return you earn on your money) equals . . . 72.

Let’s try an example: To double your money in 10 years, what rate of return do you need? The answer: 10 times X = 72, so X = 7.2 percent.

Now try it the other way: If someone tells you a particular investment should double in four years, what rate of return each and every year is he promising? Answer: 18 percent (72 divided by 4 = 18)

Every investor should know the rule of 72. It’s a nice heuristic to quickly compare available investment options.

Stimulate Your Mind

Forget the stock market for now, and consider some amazing content we read in recent times…

Studying related skills or concepts in parallel is a surprisingly effective way to train your brain. The Interleaving Effect.

School is one thing. Education is another. The two don’t always overlap. Whether you’re in school or not, it’s always your job to get yourself an education.

A wise man once said, “School education will earn you a living, but self-education will make you a fortune.”

You have to be curious about the world in which you live. Look things up. Chase down every reference. Go deeper than anybody else—that’s how you’ll get ahead.

Schools are irrelevant in the modern world where every information is just google-away. There is no skill, no subject that you can’t learn for free today.

Google everything. I mean everything. Google your dreams, Google your problems. Don’t ask a question before you Google it. You’ll either find the answer or you’ll come up with a better question.

Today the world’s best universities have generously opened their classroom doors for anybody with an internet connection. Cousera, Udacity, Skillshare and the likes are offering deep researched knowledge in an enormously interesting and easy way for anyone to learn and benefit from.

Always be reading. Go to the library. There’s magic in being surrounded by books. Get lost in the stacks. Read bibliographies. It’s not the book you start with, it’s the book that book leads you to.

Collect books, even if you don’t plan on reading them right away. Filmmaker John Waters has said, “Nothing is more important than an unread library.”

Nassim Taleb calls such library of unread books an Anti-library. In his book, The Black Swan, Taleb writes –

A private library is not an ego-boosting appendage but a research tool. Read books are far less valuable than unread ones. The library should contain as much of what you do not know as your financial means, mortgage rates, and the currently tight real-estate market allow you to put there. You will accumulate more knowledge and more books as you grow older, and the growing number of unread books on the shelves will look at you menacingly. Indeed, the more you know, the larger the rows of unread books. Let us call this collection of unread books an antilibrary.

You may be out of college, but don’t let that fact come in the way of your continued education.

Do don’t just go to bed every night, go to bed smarter than when you woke up.